Stock Market Analysis

Bounce

2008-01-10T18:02:00.000-05:00

The BPCOMPQ comes through again in calling the bounce. The trading day started out with a downside bias again as investors reacted to a string of disappointing same-store sales reports from the retail sector – and for a while, it looked as though stocks were going to suffer through yet another day of selling pressure. However, positive news helped the market back into positive territory by the afternoon: Federal Chairman Bernanke hinted at further interest-rate cuts, and Bank of America (BAC) announced it's in late-stage talks to buy out Countrywide Financial (CFC).

The Dow Jones Industrial Average (DJIA – 12,853.09) settled on a gain of 117 points, or nearly 1%, by the time the closing bell sounded. All but 6 of the Dow's 30 components closed higher. The DOW's intraday gains found a ceiling near the 12,920 level, though it has reestablished a foothold north of its 20-month moving average.

The S&P 500 Index (SPX – 1,420.33) added 11 points, to settle atop the 1,420 level for the first time since January 3. The Nasdaq Composite (COMP – 2,488.5) rose by an even 14 points, extending its winning streak to 2 sessions. The NAS is now just a slightly below support from its 20-month trendline.

Crude-oil futures declined today, as concerns over a possible slowdown in the global economy led investors to believe that demand could lessen. Yesterday, Goldman Sachs warned that a U.S. recession could be on the horizon; today, the investment bank followed up by saying there's a 50% chance that a similar economic pullback could hit Japan in 2008. According to MarketWatch, the U.S. and Japan account for one-third of global oil consumption. However, crude pared its losses in late-afternoon trading as investors reacted to Bernanke's implication that the Fed could cut rates again this month.

The promise of another Federal Reserve rate cut was also bullish for gold; February-dated gold soared to a new record high of $897.30 an ounce, blowing past its recently attained previous high of $894.40. The Gold rose as the U.S. dollar traded lower against the euro and the yen in the wake of Bernanke's comments. By the close, the front-month gold contract tacked on $11.90 to close at $893.60 an ounce.

Levels to Watch in Trading:

Dow Jones Industrial Average (DJIA – 12,853.1) - support at 12,500; resistance at 14,000

S&P 500 Index (SPX – 1,420.33) - support at 1,365; resistance at 1,510

Nasdaq Composite (COMP – 2,488.50) - support at 2,350; resistance at 2,750

Think Agriculture

2008-01-09T13:06:00.000-05:00

Case for Ag in 08, Mosaic reported a 45% profit surge and guided higher for 08 and beyond. “Our second-quarter results demonstrate that Mosaic is leveraging the robust agricultural economy and delivering record results," CEO Jim Prokopanko said in a statement. He added that his company is on track "to deliver strong results in fiscal 2008 and beyond."
Mosiac said industry fundamentals should remain robust this year. "Phosphate and potash prices increased to even higher record levels at the end of 2007 and this momentum is anticipated to continue into 2008," the company said in a press release. "Further increases in grain and oilseed prices during the last several weeks have bolstered farm economics worldwide and solidify strong nutrient demand prospects for 2008." Third-quarter sales volumes for Mosaic's phosphates and offshore segments will probably be below the second quarter, but that's in line with expected seasonal patterns.
Phospates volume was 2.28 million tons for the just completed quarter, down 1% on the year.
For the fiscal year, volumes in the phosphates business should be 8.6 million to 9.1 million metric tons. Potash volume will probably total 8.5 million to 9 million metric tons. Both forecasts are unchanged from Mosaic's prior targets. This coupled with Monsanto’s guidance should bode well for TRA, TNH, POT, AG, DE and AGU to name a few.

Oversold Battered Bruised

2008-01-07T06:38:00.000-05:00

Look I now I am not saying anything that people already don't know, we are deeply oversold and at a level where we usually bounce, take a look at one of my favorite indicators to call that bounce the $BPCOMQ (see previous posts). We are right at the level of the two last bounces I called, and we are below the August 16th low. But whats disturbing is that we are making lower highs when we do bounce. That is why I think its not a bottom but just a bounce. For this thinking to change we have to take out 40 on the $BPCOMPQ. For this to happen, I think the FED has to do something spectacular, something the market does not expect to get us above 40. Unfortunately, I think they won't.

Line In The Sand

2008-01-04T06:22:00.000-05:00

After four days of feeding the Bears almost took a nap. Overall on a psychological note it was a bad day. The market gave up most of its gains but we could have gone down harder after a big reversal. Under the surface, energy (Services), materials and agriculture were very strong and a lot of those stocks hit 52-week highs. A look at the internals, not a rosy picture. Excet for the NYSE Decliners outpaced advancerd and the down vol was greater than up vol. Number of new lows to new highs was at a 5:1 ratio(NYSE)and 7:1 on the Nas.

Critical Levels :

Dow Jones Industrial Average (DJIA – 13,056.72) - support at 12,500; resistance at 14,000

S&P 500 Index (SPX – 1,447.16) - support at 1,400; resistance at 1,510

Nasdaq Composite (COMP – 2,602.7) - support at 2,500; resistance at 2,800

Today its all about the Job report. Futures are up six, if the market doest blast up from here we are in real trouble for the broader markets but if you are in the sectors that work the pain will be less till investors think stocks are a bargain again. Hold on tight it's about to get nerve racking!

Monsanto

2008-01-03T12:58:00.000-05:00

Monsanto Shrs Hit Record High; 1Q Net Boosted By South Amer
Last update: 1/3/2008 11:11:19 AM
By Christopher Hinton

Monsanto Co. (MON) shares hit a record high Thursday, rallying as the agricultural company raised its earnings outlook for fiscal 2008 and reported having nearly tripled its fiscal first-quarter profit.

The strong results are thanks in part to robust demand in South America for its Roundup herbicide and seed trait products, the St. Louis company's results showed.
"The quarter was spectacular," said Charlie Rentschler, an analyst with the investment firm Wall Street Access.

Shares of Monsanto recently changed hands at $118.45, up $6.98, or 6.3%, on volume of 5 million shares, already topping the stock's average daily volume of 4.6 million shares. Earlier Thursday, the shares traded as high as $119.80 a share, beating its previous record best of $116.25 set Dec. 27.
In the last year, Monsanto shares have more than doubled on demand for the company's hybrid corn, soybean and cotton seed traits that help to protect crops from pests while providing greater yields.

For the fiscal first quarter ended Nov. 30, Monsanto said it earned $256 million, or 46 cents a share, more than double the $90 million, or 16 cents a share, earned in the year-ago first quarter.
Analysts polled by Thomson Financial had expected, on average, earnings of 35 cents a share.
Monsanto also raised its earnings outlook for fiscal 2008 to $2.50 to $2.60 a share, up from its prior view of about $2.40 a share.

"Our results in the first quarter represent a solid start to the fiscal year and highlight the strong performance of our Latin American business," said Chief Executive Hugh Grant in a statement. "With the most significant part of our annual business cycle still to come, we believe these results position us for another strong fiscal year."

The improvement in first-quarter cash flow - to $996 million from $600 million last year - indicated plenty of prepayments from U.S. corn farmers.

"The spring should be very, very strong," Rentschler of Wall Street Access said.
Monsanto's second and third quarters are typically its strongest.
Total sales for the latest quarter rose to $2.1 billion from $1.5 billion, on the back of robust Roundup sales in Brazil and Argentina as well as greater adoption of its seed traits. Herbicide sales to Europe also helped, Monsanto said.
Analysts had been looking for first-quarter sales of $1.9 billion, on average.
Shares of Monsanto rival Syngenta AG (SYT) were also climbing Thursday, recently up $3.46, or 6.8%, to $54.09.

Bullish On Brazil

Monsanto noted that higher corn commodity prices are driving growth in plantings in Brazil to about 35 million acres. Currently, about 28 million acres use hybrid seeds, the company said.
Recent estimates also suggest that soybean production in the country could be slightly higher than last season as well, when 50 million acres were planted, the company said.
Monsanto also noted in a separate news release that its research and development pipeline volume was currently one of the company's largest, including SmartStax corn, disease-resistant soybean, second-generation high-oil soybeans, high-stearate soybeans and high-oil corn.
The agricultural industry has been benefiting from new demand in biofuels, which has increased crop commodity prices and encouraged the planting of additional acreage.
In November, sector bellwether Deere & Co. (DE) reported 52% growth in fourth-quarter earnings due to strong overseas sales. For 2008, the farm equipment maker expects to see double-digit sales of its products in the U.S. and to South America.
Deere's shares were recently trading up $2.42, or 2.7%, recently, changing hands at $92.62.
-By Christopher Hinton; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 03, 2008 11:11 ET (16:11 GMT)

Positions Update

2008-01-03T12:32:00.000-05:00

For the Purpose of the BLOG:

Gainers (since date mentioned)

VIP +37%
MTL +29%
MDR +20%
NOV +16%
BVN +15%
MTW +12%
OIH +9%
RIMM +9%
FCX +8%
ITB + 1%
TEX -6%
JCI - 11% (Closed position)

DRY BULK SHIPPING

2008-01-03T10:54:00.000-05:00

On October 18Th 2007, Jim Cramer on Mad Money made a call in favor of Dry Bulk shippers. His best pick at that time was Dianna Shipping which is down 11% as of today. The main players in the group are down an average of 35% since that call. I am going to stick my neck out and say that the group has hit a bottom. I'm going to buy DRYS, the fastest growing and cheap on a relative valuation basis and has a chart pattern I like. Its down from 130, tested its lows twice around 71 and it's headed to PAR (first major resistance) in my humble opinion.

Now, I hear all this talk about shipping rates coming down and there is a lot of negative news out there regarding slowing world growth but if you read my past posts I don't think that's true.

I have been to India (IFN, nice yeild as well), Middle East (TRAMX)(Dubai and Abu Dhabi) and Pakistan. All those countries are growing very quickly and the thirst for raw materials will not end any time soon. What we take for granted here are all luxuries in other parts of the undeveloped world (obviously I am not referring to Dubai or Abu Dhabi).

I am talking about food (MON, MOS, TRA), hot water in the winter, electricity 24/7, gasoline for cars and trucks as needed. Roads that aren't cracked up, cell phones, broadband Internet,Cable TV just to name a few. What are reffered to nowadays as emerging markets were all agriculturally based countries for hundreds of years (except Russia, political problems and war set it back 50 years) and Industrialization only began a couple or three decades ago. The rural workers moved to the cities to work in factories. They now can no longer grow their own food, they have to buy it. They need phones, but they have no credit. They buy pre-paid cell phones. They need transportation to get to work, beds to sleep in, electricity, you get the picture. If there is a slow down it will be small and temporary because its going to take forever to develop places like Africa, Russia, China and Eastern Europe (CEE). It'll take 20 years in India just to fix New Deli and Mumbai's infrastructure, 30 plus years in Pakistan but they are both moving in the right direction (aside from terrorism). As for places that are on fire. South Africa (EZA), South Korea (EWY), Brazil (EWZ) and certain parts of Latin America growing and have tremendous resources(they need infrastructure). Some resource stocks I like FCX, RIO, BHP and BVN). I am not naming any machinery stocks like TEX and CAT cause the price of US slowdown is not in the stocks but others like FWLT and MDR are making new highs even in this environment that speaks volumes for my thesis. Also look at all the Ag. stocks they are ripping while the averages are below their 200 day moving averages.

Please note my thesis on world growth is based solely on what I have seen, and experienced with my own eyes. The growth train around the world is rambling and strong its going to keep rolling. The only thing that can stop it is war in the respective regions I mentioned, so pray for peace.

With that said I will continue to believe in the world growth story until my charts tell me different.

2008

2008-01-02T11:27:00.000-05:00

2008 is finally here and after taking a break for the holidays its time to get back to work. Boy we are off to a miserable start and there is a lot of gloomy chatter out there. One thing I am looking at in this environment is what I’ll call the difference between the mood on the Street and the Charts. There is non-stop subprime issues and the recession talk on CNBC, it feels as if the view on the Street is that we are just one bad day away from outright financial Armageddon. However, a longer-term chart of the S&P 500 Index (SPX) shows we are still in an up trend. In fact, a rally of 6% is all we need to hit new all-time high territory. This is contrary to what happened when the internet bubble burst. At that time all I heard was that everything would be back and that we were in a correction even as The Market suffered a steady blood letting, but the mood was much cheerier than now. One of the indicators I follow indicator is the 21-day moving average of the equity-only put/call ratio. As the name suggests, this ratio looks at option activity for all optionable equities - filtering out exchange-traded fund and index options. This ratio has trended higher since mid-October and is now nearing its August peak of 0.79. This shows that people are becoming more bearish, thus increasing the chances of a tradeable bottom, very soon. Turning back to that August peak in the ratio, it coincided with the bottom of the summer sell-off and subsequent 15% rally in the SPX during the next two months. This indicator, coupled with some other sentiment indicators like BPCOMP show we are almost bottoming from this recent slide. Another thing I look at is the number of up days in a row vs. the number of down days in a row. I have noted in the past that everytime we have been down 5 days in a row, we have had a powerful rally, that lasts a few days. As of today we are down 4 days in a row, so lets see tomorrow could be a day that leads to a turn around.

In scanning these negative headlines, it’s no surprise that investors are bailing out of domestic mutual funds at record levels and portfolio insurance has nearly doubled since last year. But when I look at a long-term chart of the various stock indices, I ask myself what the fuss is all about and what will catch investors flat-footed? The market participants are aware of the risks, but the charts ultimately suggest that the troubles are contained to financials and housing. Looking elsewhere, I see many stocks making great gains on the heels of better-than-expected earnings, even amidst the gloomy headlines. I would expect these worries to carry over into 2008. While the media and retail investors worry about what might happen to the economy and sectors that have been devastated by the subprime and housing mess, I’ll continue to focus on stocks and sectors that are currently rewarding investors behind the headline news. I believe this year will be just like last year. Money will be made following world growth trends. The sectors that worked last year will work again this year.

Oil and Gas exploration
Agriculture
Metals and Mining
Aerospace and Defense
Clean Energy (solar)
Foreign Cellular Companies
Dry Bulk Shipping

Stocks I currently own VIP, TRA, FCX, PBR, PBW, KALU, HOLX, ATW, DE and HAYN

Recap 12/18/07

2007-12-19T06:55:00.000-05:00

Yesterday’s trading started out on a positive note, after Goldman Sachs (GS) reported a record-setting fourth-quarter and the European Central Bank took drastic steps to help ease liquidity concerns. Europe's Fed offered up $501 billion to banks after presented unlimited 2-week funding at 4.21%, a move meant to fill in end-of-year funding gaps at major investment banks. Meanwhile, in the U.S., the Fed proposed a set of rules to help keep subprime-mortgage history from repeating itself.

After a midday dive to the downside, the Dow Jones Industrial Average (DJIA – 13,232.47) settled for a gain of 0.5%. The DOW’s intraday progress was halted by resistance from its 20-day moving average.

The S&P 500 Index (SPX – 1,454.97) turned in a gain of 9 points by the close, with the 1,460 level providing resistance to the index's rally. The Nasdaq Composite (COMP – 2,596.0) rose 0.8% higher but it could not get up to 2,600 level.

I am still net short but looking to lighten up. We had a good day psychologically as the market could have just rolled over. We need another up day tomorrow to get past the resistance. We also need the FED to cut inter-meeting. They are just sitting around waiting to see if their efforts will psychologically stabilize the credit situation. To this point it has not worked.

Maybe this is wishful thinking but the “Credit Crisis” has hit the front page of the New York Times, this is usually a good contrarian indicator of a top or bottom.

Dow Jones Industrial Average (DJIA – 13,232.47) - support at 12,500; resistance at 14,000

S&P 500 Index (SPX – 1,454.97) - support at 1,400; resistance at 1,510

Nasdaq Composite (COMP – 2,596.0) - support at 2,500; resistance at 2,800

Capital Preservation

2007-12-18T09:28:00.000-05:00

Last Tuesday's Federal Open Market Committee meeting brought a rate cut, as everyone was expecting. Many - including myself - hoping for a more aggressive reduction of 50 basis points. We didn't get it, and the market was quickly punished. The next day, the Fed announced a plan where it and other central banks around the globe would pump money in to help with the credit-market fallout. After a sharp, and extremely brief early rally, stocks continued the rest of the week sharply downward. By Friday's close, the Dow Jones Industrial Average (DJIA) had given back 2.1% since the prior Friday, the S&P 500 Index (SPX) was off 2.4% for the week, and the Nasdaq Composite (COMP) had posted a weekly decline of 2.6%. Then over the weekend Greenspan reared his ugly head, talking about recession and possible stagflation. That killed the trade in Asia where all the bourses were down big. This translated to massive selling in Europe and then Americas.
Today, Goldman Sachs 4th-Quarter topped estimates but the beat did not buoy the shares, as they did not do their usual blowout. Still pretty impressive given the backdrop. BBY reported that third-quarter earnings rose 52% to $228 million, or 53 cents per share, compared to last year's $150 million, or 31 cents per share. Revenue for the quarter rose 17% to $9.93 billion. Analysts were looking for a profit of 41 cents per share. More importantly, Best Buy boosted its full-year earnings forecast to $3.20 per share from a prior guidance of $3.15 per share.
After the close last night, Adobe Systems reported that net fourth-quarter income rose to $222.2 million, or 38 cents per share, from $183.2 million, or 30 cents per share, last year. Meanwhile, revenue rose 34% to $911.2 million. Excluding certain items, earnings were 49 cents per share, edging past Wall Street's consensus estimate for 48 cents per share. Revenue was also above estimates for $887 million, according to Thomson Financial. Following the report, the shares dipped nearly 1% in electronic trading, but appear to have rebounded heading into the open this morning.
Shares of solar energy companies resumed their climb after dipping in Monday's session, as Lehman Brothers raised price targets on several names. Citing expectations that polysilicon, a key component of solar wafers, will continue to be in short supply, Lehman analyst Tim Luke raised his target on MEMC Electronic Materials to $110, from $90, implying he expects the stock to climb nearly 32 percent in the next year, from it's close at $83.42 Monday.
St. Peters, Mo.-based MEMC added $2.02, or 2.4 percent, to $85.44 premarket.
And shares of Epix Pharmaceuticals shot higher after the small biotech released study results for a drug to treat Alzheimer's Disease that it called "encouraging and compelling."
While the study was only two weeks long, investors didn't wait to bid up the Lexington, Mass., company's stock, pushing it higher by $1.70, or 57.2 percent, to $4.67 premarket, from its close at $2.97 Monday.

Economic Calendar

The economic calendar is all about real estate today, with the release of November's housing starts and building permits data. Wednesday's economic agenda is anemic, with the usual crude inventories the lone release. Thursday picks up, as the government will release the final Gross Domestic Product (GDP) report for the third quarter, as well as November's leading indicators, amongst others. Friday will end the week with November's personal income and spending reports, as well as the core Personal Consumption Expenditures (PCE) inflation data.
In August after a sharp rebound we went back down at around the level we are at know. This is a crucial psychological area. We need to keep going up from here to confirm this bull market. Real levels of support 12500 and 1400 on the DOW and S&P respectively.

Money Flowing Towards Oil Services

2007-12-14T12:26:00.000-05:00

Big Oil is on a spending spree in the Gulf of Mexico.
A couple of months, the oil companies of the world spent more than $300 million on 18 million potentially oil rich acres in the Gulf of Mexico. The U.S. Mineral Management service packaged the acreage, located off the Texas coast, into 282 tracts.
The big winner was British Petroleum, which scooped up 91 tracts and spent $31 million. The big spender was Norway's Statoil, which paid more than $138 million for 36 tracts.
The opportunity of giant fields in the Gulf drew 47 companies to the auction. This list is interesting because it includes some quasi-state owned oil companies, such as Statoil and Brazil's Petrobras. In fact, these two companies are relative newcomers to the Gulf of Mexico.
Neither company is new to offshore drilling, though. Petrobras is one of the world's best deepwater drilling outfits... and currently operates 40 offshore drilling rigs, primarily off the coast of Brazil. The company has a single rig drilling in the Gulf of Mexico, Rowan's Bob Palmer. Statoil operates 24 offshore rigs, but none in the Gulf of Mexico.
There's a great reason the Gulf of Mexico is getting all this attention. It's one of the few remaining regions in the world with huge potential, and is owned by a government that doesn't claim the oil. Quite the opposite, the United States embraces competition for the oil. Also there is little risk aside from Hurricanes, people wont be trying to take workers hostage like in Nigeria, and there is less political risk as well.
So why not by the big oil companies? You have to understand that these are huge projects and they long time to complete. It will take years for you to see a return on their balance sheets.
However, if you invest in the service companies that immediately benefit from these deepwater spending sprees you'll continue to see terrific returns over the next six months to several years. As Big Oil continues to spend that money, the service companies are going to be the beneficiary for years to come.
Some ways to play this field are ETF’s and stocks. The ETF (XES) and (PXJ) are a basket of stocks in the oil services sector. Large caps with good fundamentals include Transocean (RIG), Shlumberger (SLB. A smaller comapny the the former two and in my thinking the best pick is National Oilwell (NOV) the stock is the most undervalued in the group and is growing EPS at >20%. MID cap, best play is CAM excellent management and growth. There are some riskier smaller companies like FTI, GRP and FTK if some wants a smaller cap plays.

Profiting from Africa and The Middle East

2007-12-13T14:11:00.000-05:00

The Middle Eastern markets are strong but it’s important to understand the Middle East is not just one market. It's 13 markets spread out over a huge space that takes many hours to fly over. And not all these places are driven by oil. Which is one of the misconceptions of the Middle East along with that its economy is highly dependent on oil and that if the price of oil drops the Middle East is doomed. For example oil only accounts for 3% of Dubai's GDP. It’s a fact that Dubai’s going to be completely oil dry in the next two decades.
Every market is different. In Morocco, the most important factor for economic growth is rain. In Egypt it's tourism. In Dubai, it's the nightlife.
And these economies are bigger than you might think. Taken as a whole, the Middle East is the eighth biggest economy in the world. On a per capita basis, Qatar, the United Arab Emirates, Kuwait, Oman, Bahrain, and others are richer than Russia, Brazil, and just about any other emerging market you can name.
There are incredible projects planned in the Middle East like the construction of the famous Palms and Globe (manmade islands shaped like a giant palm tree and a world map, respectively) and other surreal projects in Dubai. Dubai government to build a central utilities complex and cargo warehouse as part of Dubai International Airport expansion project.
The Middle East currently has more infrastructure projects planned than China and India combined. Saudi Arabia alone is planning 13 cities, not towns, but full cities the size of Dubai. And all of these projects are budgeted at $40 oil. Oil would need to fall more than 50% for these projects to be uneconomical."
You can't invest directly in most of these markets unless you're a citizen of the Gulf Cooperation Council. So most U.S. investors are out of luck. Also The Cooperation Council for the Arab States of the Gulf likes to keep its contracts and projects in-house as much as possible. In Saudi Arabia, 90% of businesses are privately held, family-run businesses. In Abu Dhabi, most of the city's largest developments are in the hands of a single development company, owned entirely by the government and answering directly to the crown prince. Contracts going to international firms are usually one-time (or, at most, two-time) deals. That’s why despite the calls of people like Jim Cramer, you can’t just buy Foster Wheeler or Halliburton to take advantage of this trend.
One way to invest is by using ETF, Symbol (GAF) State Street SPDR, but its mostly related to South African companies. The best way to invest by using the T Rowe Price Africa/ Middle East Fund (TRAMX).

Africa & Middle East Fund

Objective: The fund seeks long-term growth of capital by investing primarily in the common stocks of companies located or with primary operations in Africa and the Middle East.

Strategy: The fund expects to make substantially all of its investments (normally at least 80% of net assets) in African and the Middle Eastern companies. The fund may invest in common stocks in the countries listed below, as well as others as their markets develop:

Primary Emphasis: Bahrain, Egypt, Jordan, Kenya, Lebanon, Morocco, Nigeria, Oman, Qatar, South Africa, and United Arab Emirates.

Others: Algeria, Botswana, Ghana, Kuwait, Mauritius, Namibia, Tunisia, and Zimbabwe.

The fund is registered as "nondiversified," meaning it may invest a greater portion of assets in a single company and own more of the company`s voting securities than is permissible for a "diversified" fund. Depending on conditions, the fund`s portfolio should be composed of investments in about 30 to 40 different companies although the exact number could vary substantially depending on market conditions. The fund may make substantial investments (at times more than 25% of total assets) in the telephone or banking companies of various Middle Eastern and African countries. Stock selection reflects a growth style.
Estimated expenses:

Redemption fee 2.00% for shares held less than 90 days.

Management fee 1.06%

Other expenses 0.69%

Total annual fund operating expenses 1.75% (which makes it the highest expense ratio of any TRP International Fund).

Portfolio Management

Africa & Middle East Fund Christopher D. Alderson, Chairman, Ulle Adamson, S. Leigh Robertson, and Joseph Rohm. Mr. Alderson has been chairman of the committee since its inception. He joined T. Rowe Price International in 1988 and has been managing investments since 1986.

Crossroads

2007-12-13T13:57:00.000-05:00

At the end of November I wrote about the BPFINA as a contrarian indicator and it responded with a 12% gain in the financials until recently. I was hoping the FED would cut aggressively but they did not. Right now the market has to solve this on its own. The indicator is in no mans land at the time being. I was hoping for a positive reaction to Lehman Brothers Holdings Inc. (LEH) whose executives said they are optimistic they won't have to write down another $830 million on floundering fixed-income assets in upcoming quarters, despite a slowing economy. The financials are down by an average of 2.5%, this is a bad sign.

Next week Goldman and Bear report, we need some good reports to get the financials going again.

Insider Buying

2007-12-13T13:36:00.000-05:00

What a depressing day, or week for that matter, but according to a particular indicator things will get better.

The insider sales-to-purchases ratio was 13 in November. In other words, for every $13 corporate insiders took out of the market, $1 went back in.
I realize this doesn't sound terribly bullish, but remember that U.S. executives receive a ton of their pay via stock compensation. Stock options account for nearly half (48%) of CEO pay at Fortune 500 companies. So insider sales always outnumber insider purchases.

Because of this, anytime the sales-to-purchases ratio falls below 20, it's considered bullish... 13 to 1 is pretty bullish.

In dollar terms, insiders bought $297 million worth of stock in November. This isn't far off from the $330 million they bought in August before an 8% market rally. And in November, insiders only sold $3.8 billion worth of stock. That's the lowest November amount since 2002. But this is not a near-term indicator but forecasts 6 months down the road.

So in the middle of 08 the homebuilders, and financial stocks should be outperforming the other sectors. Along with this theme the basic materials should continue to boom to meet the new supply.

Look at the chart, its broken its downward trend if ever so briefly. But recently had a 20% move with a 50% retracement. Build a position for the next year, good entry point. Place stops slightly below the trendline.

EXAMPLES OF INSIDER BUYING

NVR
$52.4 million

Meritage Homes
MTH
$14.9 million

Brookfield Homes
BHS
$5.3 million

Pulte Homes
PHM
$150,000

KB Home
KBH
$93,000

PPI: Futures

2007-12-13T08:52:00.000-05:00

PPI came in hot, core was tame on a YOY. Retail sales and Jobless claims were bullish. The futures fell sharply after the release of data but since have gone the other way. At this time DOW looks to open down .5% as opposed to over a percent since 8:40am. So lets see where we go. Man this market is tough, it was a nice set up to cover a little and go long has now let us in nowhere land, now we have to be patient and find the lines to enter and exit. Looking for good entry points in my opinion is the difference between goo and bad trades. You can have a great stock but you have to enter it right to make good money. There are no flukes in the markets. The competition is just way too good.

Pre-market Update

2007-12-13T08:19:00.000-05:00

Futures are down big and we should open at about 70 points above the support level at the 13000 mark on the DOW (200DMA), this is a good point to lighten up on shorts and go long a little, and then sell any intra-day rally. Coincidentally, DXD ultrashort DOW ETF is at its primary upwave trendline resistance right at the open, if it breaks hard above 50, there will be more selling. However all this could change, all depends on the PPI and to a lesser degree on the Jobless claims.

The Bernanke strategy has backfired so far and until the market figures out what the FED is trying to do, stay away or stay short the DOW. I haven't really heard anyone except Brian Westbury come in support of the FED moves. Frankly, I don't understand what they did and the timing is an enigma to me.

Anyway, my job is to protect Capital at this point, and make small bets as I mentioned before.

Bernake: I don't get this guy

2007-12-12T09:20:00.001-05:00

Why could they have said something yesterday? He blows up the market, a lot of people bought pretection yesterday, including me. Shorts are going to get blown away at least at the open. There is no way to position your self with this guy. At see what happens at the close.

Market Recap: The Fed Blows It !

2007-12-11T17:48:00.000-05:00

Man is everyone disappointed big time. Bernanke has is head in the sand. I don't get this statement at all. We are going to a recession and this guy is worried about inflation. The cuts a drop in the bucket, we blew right through the swiss cheese supports and we are headed down to the 1370-1400 on the S&P. Furthermore, all rallies from here on in will be sell rallies till the subprime mess goes away. I am net short at this time with a 30% cash (as of this afternoon) and a couple of international plays to the long side, along with oil services. The financials got hammered, good thing I took some profits and bought insurance ahead of the FED yesterday and today, it helped a little but I tell I really don't like this market as much as I did before Bernanke dropped the hammer. I took a big hit today like everyone else who was long. Building short positions in any rally.

Pre-market Update

2007-12-11T08:49:00.000-05:00

Futures indicate a slightly higher to flat open. The Wholesale Inventories report for October will be released at 10:00 ET, but it won't have any impact as the market will remain preoccupied with the FOMC decision. The majority of people expect a 25 basis point cut in the fed funds and 50 basis point cut in the discount rate. I think aside from cutting rates the tone of statement they make is the key. They have to say we are worried about growth and not inflation and they will ensure the proper working of the financial system by ensuring liquidity. In corporate news, Texas Instruments (TXN) provided a mid-quarter update that raised the low end of its prior guidance ranges for earnings and revenue. Washington Mutual (WM) is getting slammed like Celgene's beat down yesterday. WM is cutting its quarterly dividend to $0.15 from $0.56 and will make an offering of convertible preferred stock in a bid to raise approximately $2.5 billion. Below is some more evidence to dispute talks of global slowing due to US slowdown.

Baosteel likely to inject assets into listed unit

Regency Energy to buy gas gathering system for $139 mln

Prudential Financial reports stake in Virgin Mobile

Airbus says Taiwan's China Airlines to buy A350

Janus Capital ups passive stake in National Financial Partners

Spain's FCC buys two U.S. waste treatment firms

UCBH completes acquisition of Shanghai bank

Absolut vodka maker to be sold via auction -govt

Cadbury sees 2007 sales growth beating its target

OMX Likely to Follow V&S Sale-Sweden's Odell

STMicro to buy Genesis for $336 million in cash

Miner Xstrata open to merger suitors - FT

Lacoste makes cash bid for Sweden's Gant

Shanghai Tunnel seeks Turkey, Mexico deals-source

Wacker Chemie to take over polymer joint ventures

UCBH takes "full stake" in Shanghai ban: WSJ

ArcelorMittal acquires Argentina's MT Majdalani

Shanghai Tunnel seeks Turkey, Mexico deals: source

Dubai's Istithmar eyes subprime hit U.S. firms

Daily Market Recap

2007-12-10T16:44:00.000-05:00

We started the day off with bad news very early this morning from Europe’s largest bank, UBS. The bank announced that it expects to record a $10 billion write-down for its subprime holdings and anticipates reporting a net loss for the fourth quarter versus its prior expectation that it would record a profit. UBS added that it was possible it could report a net loss for the full year. Then they reported the government of Singapore and a Middle Eastern investor would be making a sizeable investment in the bank.
Then came bad news from MBIA, it warned that its mark-to-market losses will be greater in the fourth quarter than in the third quarter. Fortunately, the market concentrated on the indication that private equity firm Warburg Pincus is going to strengthen MBIA, with a $1 billion investment. There was M&A activity as well, which created a positive tone as we (see below).
The Financials were up 2% today, have lead this rally (12% since bottom) and for this rally to be sustainable they will have to continue leadership. Along with the other bull markets to follow Oils and Gas exploration and services, Minerals and mining, Aerospace and Defense, and finally Tech cause they were the last to bottom.
Industry performance today: Bank +2.4%, Broker +2.4%, Housing +3.4%, REITs +2%, Coal +1.9%, Gold +1.7%, Trucking +1.6%, Chemical +1.5% and Oil Service +1.1%.
Technically: We have run nicely off last Tuesday's low has run in to some light resistance (1520 on S&P 500, 2724 NASDAQ Comp, 13750 and Dow) but mostly people are just nervous ahead of the FOMC meeting tomorrow.

In my opinion Bernanke has to lower rates by 50 basis points. He must also say that FED is more worried about the growth of the economy than inflation, and finally they must communicate that it wants to provide liquidity to ensure the proper functioning of the banking system. I am all in so I have nothing new to buy, see previous posts to see what I have been buying. All the positions except a couple are profitable except JCI (-3.4%) and PCR (-1.3%). MTL and VIP are up 28%, ITB up 21%, MDR and NOV up 11%, FCX and MTW up 9%, XLF 10%, OIH up 4% and BVN up 2.4%. I will take 1/3 of the table If FED does what I hope, and let the rest run into resistence hoping for pullbacks to buy.

If FED doesn’t go 50: Buying protection to the down side with close stops, it will soften the blow, buying some puts, DXD, SDS and QID ahead of the FED.

PCR Update

2007-12-10T10:24:00.001-05:00

This is from Zacks ROE Strategy, they posted today.

Perini Corp. (PCR) and its subsidiaries offer general contracting, construction management, and design-build services to private clients and public agencies worldwide. This is an excellent pick to round out our list of ROE heavy-weights with a reading of 32.4. The analyst community has been very bullish on the company lately, with three of four covering analysts raising current-quarter projections within the last 30 days. The consensus estimate has risen accordingly, growing by 13 cents to its current level of 73. Perini reported a great quarter on Nov 8, with net income jumping to $24 million from $9.6 million in the same quarter last year. The company boosted its full-year profit and revenue targets. Perini now expects profit of $3.30 to $3.45 per share on revenue between $4.4 billion and $4.6 billion. To round out the rosy outlook is Perini's price to sales ratio, which comes in at .35

If PCR closes below its 200dma, I am going to sell, this stock has been acting very poorly during this rally.

Merger Mondays: Back Again

2007-12-10T08:33:00.000-05:00

UBS writes down $10 bln, Singapore injects capital 8:17am EST
ZURICH (Reuters) - UBS revealed a $10 billion writedown and an emergency injection of funds from Singapore and the Middle East, making it the biggest victim of the U.S. subprime crisis to date among major European banks. Futuers are holding up so far ahead of the FED tomorrow.

Blackstone plans bid for Rio with Chinese: report 7:52am EST
SYDNEY (Reuters) - Investment group Blackstone is planning a counterbid for Rio Tinto Ltd/Plc with a consortium believed to include China's sovereign wealth fund, Britain's Daily Telegraph newspaper said on Monday.

Lafarge to buy Orascom Cement for $12.8 bln

Japan's Eisai to buy MGI Pharma

Reuters and Intl Herald Tribune sign content deal

Montreal, TSX exchanges to merge: report

Dun & Bradstreet says in M&A talks in China

Reckitt buys Adams cough treatments

Carillion agrees revised $1.2 bln bid for McAlpine Ads by GoogleWhat's This?

Wal-Mart plans 100th China store
Dec. 10 - The world's largest retailer eyes big sales in one of the world's fastest growing economies.

Weekly Recap 12/8/07

2007-12-09T07:43:00.000-05:00

. The ISM's Index of Manufacturing Activity unexpectedly fell to 50.8 in November compared to October's 50.9.

. The ISM's Non-Manufacturing Index fell from 55.8 in October to 54.1 in November.

. The New Orders Index fell to 51.1 in November, a 4-1/2 year low.

. Productivity surged to 6.3% in the third quarter of 2007.

. Unit labor costs showed a 2% annual decline in the third quarter.

. U.S. Factory Orders rose by a strong 0.5% in October.

. Non-durable goods orders were up 1.3% in October.

. nonfarm payroll jobs report showed an increase by 94,000 jobs in November.

. Unemployment rate was at 4.7%.

. Michigan Consumer Sentiment Index fell to 74.5 from 76.1 , and second worst reading in the last 15 years.

. Consumer Credit increased at an annual rate of 2.3% in October, slightly faster than the previous month's gain of 1.6%.

Right now we are in a cycle of the stock market in which earnings and inflation are rising, while interest rates are falling. We are set up well technically for a move higher but the Fed has to cut rates aggressively to save the economy from recession. I think they will because the Bush is going to push Bernanke to do it. I don't care what they say in public, it's what happens behind closed doors that's relevant. Paulson, a smart market guy from Goldman Sachs is on the job (advising Bush). The President doesn't want to leave office with another negative on his record.

It will be a volatile next week, everything depends what happens on Tuesday.

Top Movers Today

2007-12-07T16:37:00.000-05:00

Price | Mkt Cap | Vol | $Vol | Popularity

Top movers Gainers Change Mkt Cap
LDK Solar Co., Ltd. LDK 13.19% 4.78B
Solarfun Power Hldgs C... SOLF 12.85% 1.24B
Sirona Dental Systems,... SIRO 12.58% 1.67B
DynCorp International ... DCP 10.90% 1.36B
JA Solar Hldgs Co., Lt... JASO 10.36% 2.93B

Losers Change Mkt Cap
Macrovision Corporatio... MVSN -21.35% 1.10B
Gemstar-TV Guide Intl,... GMST -16.56% 2.14B
FormFactor, Inc. FORM -12.79% 1.65B
StatoilHydro ASA (ADR) STO -11.56% 64.77B
SAVVIS, Inc. SVVS -10.31% 1.34B

Excludes stocks with mkt cap less than $1B. See FAQ

Sector summary

Basic Materials +0.58% Capital Goods +0.35% Diversified +0.30%

Cons. Cyclical +0.05% Cons. Non-Cyclical -0.24% Energy -0.75%

Financial -0.45% Healthcare +0.27% Services -0.24%

Technology +0.05% Transportation +1.17% Utilities +0.13%

Basically as I said this morning the rally is tired and need a new infusion of news. Very little volatility in the market, every time the bears tried to see the market someone was in there buying. Goldman came out with a very bearish call, basically saying we are already in a consumer lead recession and downgraded all the credit cards, AXP and the like got whacked. The Fed is the last hope for Santa rally to year end, lets see what we get. We need 50 basis points or 25 and 50 at discount window and a dovish tone in testimony or start shorting.

Terex Corp

2007-12-07T12:21:00.000-05:00

Terex Corp(TEX) manufactures equipment for construction, infrastructure, quarrying, mining, shipping, transportation, refining, and utility industries worldwide. It operates in five segments: Terex Aerial Work Platforms; Terex Construction; Terex Cranes; Terex Materials Processing & Mining; and Terex Roadbuilding, Utility Products, and Other. The Terex Aerial Work Platforms segment offers aerial work platform equipment, telehandlers, light construction equipment, and construction trailers. Its products include material lifts, trailer-mounted articulating booms, self-propelled articulating and telescopic booms, scissor lifts, construction trailers, trailer-mounted light towers, concrete finishing equipment, power buggies, and generators. The Terex Construction segment designs and manufactures off-highway trucks, scrapers, hydraulic excavators, wheel loaders, material handlers, pumps, gear boxes, and truck mounted articulated hydraulic cranes; and loader backhoes, compaction equipment, mini and midi excavators, site dumpers, and wheel loaders. The Terex Cranes segment provides mobile telescopic cranes, tower cranes, lattice boom crawler cranes, truck mounted cranes, and telescopic container stackers. The Terex Materials Processing & Mining segment manufactures and markets crushers, impactors, washing systems, screens, trammels, and feeders; hydraulic mining excavators; surface mining trucks; and drilling equipments.

Growth Rate 22.00
P/E (Price to Earnings Ratio) 9.97
Sales Growth of 15.00% per year
EPS (Earnings Per Share) $6.72 Sales (Yearly Sales - $Millions) $8,580.00
EY (Earnings Yield) 10.03 Market Capitalization - $Millions) $6,810.00

Stock has been drilled due to higher steel costs, steep US construction recession but aside from the US its doing well. Stocks bad news is in the stock price, its undervalued based on forcated earnings and sales growth. Tecnically stock forming a bottom and has support until 56. Currently its facing primary resistence at 68-69, its gotta get up past that to enter at this point until the 80's. I would sell it below 56 for a trade but it is a good long term play on global growth.

PS. for my friend Peter, the retailers are having a nice day. I'll put up the chart, next post.

Home Builders

2007-12-07T11:55:00.001-05:00

On December 4th I bought a small position in ITB, the Home Builders ETF. Well its up 16% since then, too much too fast who know, look at the chart, its breaking out. I know whole home building and construction industry in the US is in a recession, and everyone knows it. But you make money when no one wants to buy. That may be ending.

Financial Sector ETF Short: SKF

2007-12-07T10:24:00.000-05:00

As i mentioned a couple of days ago the SKF is breaking down after forming a bearish HNS pattern. Lets see if it can go to 75. I took the other side of that trade, the XLF which is the long trade earlier this week as previously mentioned.

Generally, looks unimpressed with the job numbers especially the revisions. At least the volatility has come down and this will let the skittish investors back in the markets to keep the downside limited. I am still long up to 14300-1400 on the Dow and all bets are off if we break below 1490 on the SNP. So with two big up days I guess we take a break til Tuesday.

Market Recap 12/6/07

2007-12-06T18:41:00.000-05:00

Big Rally today with all the sectors up except a couple. We took a long time to get up above the 1490 on S&P. The markets sold off three times at the 1490 level and I thought we wouldnt make it today and that would have been a huge negative. So far my call has been right, and we will probably rally into Christmas or New Year unless Bernake messes things up, but I dont see us making new highs. 14300 was the last failure.

Last Change 52-Wk
USA (SPY) 150.94 1.43% 6.46%
Canada (EWC) 31.98 1.07% 22.39%
Japan (EWJ) 14.20 1.87% 1.43%
China (FXI) 195.74 5.92% 99.33%
S. Africa (EZA) 143.06 1.82% 27.85%
S. America (ILF)259.45 5.68% 54.80%
Singapore (EWS) 14.70 2.44% 31.37%
Taiwan (EWT) 16.17 3.45% 8.74%
Russia (TRF) 71.61 -0.68% -7.53%
India (IFN) 65.50 1.17% 38.19%
S. Korea (EWY) 68.39 3.75% 36.64%
Israel (ISL) 24.40 0.91% 32.03%

Last Change 52-Wk
S&P 500 1507.34 1.50% 6.54%
Oil (USO) 71.02 3.39% 31.79%
Gold (GLD) 79.37 0.94% 26.61%
Silver (SLV) 143.76 1.74% 5.94%
US Dollar 76.38 -0.07% -7.67%
Euro 1.464 0.18% 10.11%
VIX 20.96 -6.97% 85.98%
HUI 412.89 2.46% 15.94%
10-year yield 4.00% 0.09 -0.44

Last Change 52-Wk
Oil Service (OIH) 183.57 3.92% 24.89%
Big Pharma (PPH) 83.00 0.16% 8.78%
Internet (HHH) 61.75 1.15% 15.05%
Real Estate (IYR) 69.62 2.85% -19.25%
Financial (IYF) 99.15 1.91% -14.59%
Semis (PSI) 17.55 2.09% -1.74%
Healthcare (IYH) 72.78 1.17% 10.12%
Utilities (XLU) 43.95 -0.59% 19.04%
Defense (PPA) 23.43 0.47% 27.06%
Nanotech (PXN) 16.27 1.75% -7.82%
Alt. Energy (PBW) 24.63 1.90% 34.66%
Water (PHO) 21.45 1.66% 15.01%
Insurance (PIC) 17.96 1.53% -1.16%
Biotech (PBE) 19.49 1.56% 3.89%
Retail (PMR) 16.48 2.74% -15.66%
Software (PSJ) 20.38 0.99% 5.11%
Big Tech (QQQQ) 52.32 1.45% 18.21%
Construction (PKB)18.89 3.51% 12.11%
Media (PBS) 14.76 0.75% -6.52%
Consumer (IYC) 64.22 -0.12% -4.76%
Transport (IYT) 84.39 1.76% -1.96%
Telecom (IYZ) 29.64 1.61% 2.88%
Industrial (IYJ) 73.30 1.45% 12.15%
Basic Mat. (IYM) 75.50 1.67% 24.71%

Dow at Resistence

2007-12-06T08:03:00.000-05:00

LONDON (MarketWatch) -- The Bank of England cut its key interest rate by a quarter-point Thursday to 5.5% after economic data in the previous couple of days showed a sharp slowdown in consumer confidence and in services sector growth.
The rate cut is the first since August 2005 and comes after five hikes since August 2006.

There inflation rate is 2.1%, and they don't cut fifty. English Fed is worried about inflation, that for me is a negative. The futures were up nicely this morning before the cut and FTSE was up over a percent, its given up most of those gains.

It was looking like a nice setup earlier as we would have opened through the resistance. Keeping a itchy trigger finger today, cause I am all in and long.

Protect Capital at all cost.

What is up with this Rally?

2007-12-05T14:54:00.000-05:00

This is not a rally if we dont close higher than the Intraday highs. This would be a Faux rally. So here we are, the last trading hour and lets make a stand, I am long 100% for the first time in a while, but as RIMM (very negative reversal)sells off and averages are off their highs I am very nervous. The last 15 MINS are key for the bulls.

Dow Rolling over

2007-12-05T13:20:00.000-05:00

WHY WHY WHY??

Why is Herb Greenberg on CNBC

MICROSOFT

2007-12-05T12:43:00.001-05:00

If you are bullish like I am about TECH than the market can't go up without Mister Softee. Its up 3% today and has been lagging recently. It had blow out earnings and superb guidance stock hit 37, blew past 6 years of resistance, I am long MSFT.

PS. Santa, we need to close above 1490 on the S&P's.

BEST WAY TO PLAY with CHINA

2007-12-05T10:56:00.000-05:00

FXI, its up 74% for the year and going higher. Tell me what you think, a lot of people who have been to china, like Buffett, not Jimmy Warren think its going gangbusters and going higher. I was there last year, and let me tell you, I have not seen anything like the expansion going on there. I love China, CEE and ME & AFrica, and Brazil.

RIVERBED

2007-12-05T10:42:00.000-05:00

Hey tell me whtat you think, I have taken a beating on calls, I bought them a couple of days after they reported. I think its trying to stabilize tell me what you think.

P/E (Price to Earnings Ratio)
38.12

Sales (Yearly Sales - $Millions)
$193.00

GRT (Growth Rate)
46.00

Mkt Cap (Market Capitalization - $Millions)
$1,967.00

EPS (Earnings Per Share)
$0.73

EY (Earnings Yield)
2.64

SVT: Speculative

2007-12-05T10:19:00.000-05:00

Servotronics, (SVT) Servotronics, Inc., together with its subsidiaries, engages in the design, manufacture, and marketing control components and consumer products primarily in the United States. It operates in two segments, Advanced Technology Group (ATG) and Consumer Products Group (CPG). The ATG segment offers servo-control components, which convert an electrical current into a mechanical force or movement. Its principal servo-control components include torque motors, electromagnetic actuators, hydraulic valves, pneumatic valves, and similar devices for the commercial aerospace missile, aircraft, and government related industries, as well as medical and industrial markets. This segment also produces metallic seals of various cross-sectional configurations. The CPG segment offers various cutlery products for use by consumers and government agencies. Its products include a range of kitchen knives, such as steak, carving, bread, butcher, and paring knives for household use and for use in restaurants, institutions, and private industry; and pocket and other types of knives for hunting, fishing, and camping. This segment also offers machetes, bayonets, and other types of knives primarily for military use, as well as provides various cutlery items consisting of specialty tools, putty knives, linoleum sheet cutters, and field knives. The company sells its cutlery products under the brand names ‘Old Hickory’ and ‘Queen’ to the hardware, supermarket, variety, department, discount, gift, and drug stores.

Forget the consumer side the growth is in defense tech! Stock was more than a double this year and next year is also bright.

EY (Earnings Yield) 8.50 P/E (Price to Earnings Ratio) 11.75
EPS (Growth Rate) 17.00 Sales Growth 50.00% per year
EPS (Earnings Per Share)$0.99 Mkt Cap ($Millions)$22.00

Perini Update

2007-12-05T09:39:00.000-05:00

PCR had a significant move yesterday. with double the volume and no news, this is a tell my friends as this stock blew through resistence and is going to make new highs is the markets stay stable. VIP looks great, have had big gains in PCR, BVN, NOV, MTL and MDR:

http://custom.marketwatch.com/custom/tdameritrade-com/html-story.asp?guid={0AAF7CBC-DA0B-442C-99FA-50BD8D40C39F}

http://custom.marketwatch.com/custom/tdameritrade-com/html-story.asp?guid={39244ebd-70b1-4fa0-8f25-57d50b076937}

Closed my Amazon Dec call with a 44% gain.

Cramers wrong about MOLY, at least how to play it. FCX is the right way!

http://custom.marketwatch.com/custom/tdameritrade-com/html-story.asp?guid={56ae7718-4a89-4c61-92f5-adf074d9e5cd}

Whats troubling in this rally is the XLF is weak, thats not good, I think the techs have bottomed and we should rally the rest of the week if we close higher than the mid day point.

We need to close up 300 points

2007-12-05T09:30:00.000-05:00

Take out resistence on big volume or take your profits and run or cut your losses. S&P has to get over 1490 for us to rally. and we gotta blow past 13570 or we are in trouble

FREEPORT Mc MORAN

2007-12-05T08:51:00.000-05:00

Can I hear you say Double Bottom?
With a PE of 9 and a growth rate of 27 this stock is dirt cheap and was unfairly whacked. I have owned it and sold it since 2003, but I should have just held it. This is another great opportunity the Market gods have given us to enter this stock.

The stock chart shows it clearly bottomed and there has been no real fundamental change in the business of this company, at least that been reported. ECONOMIC WORRIES, GLOBAL SLOW DOWN, HEY its not Halloween its XMAS for god sake go buy stuff.

PS. Thanks Toronto Dominion for the RIMM Upgrade.

RIMM is Killing me

2007-12-04T15:03:00.000-05:00

I am down about 5% in two days on RIMM, the stock was up 2 bucks early in the day and now its down three bucks and thats not good. So there is going to be more downside with RIMM, but I can take the pain. I bought at 107 ans 106 and 102, and I am 100% in but if it trades lower I will buy up til 98. I have no EGO (at least that what I tell myself)

Stock Market Update: 12/4/07

2007-12-04T14:57:00.000-05:00

Well as I wrote on last Friday The Markets could be down on Mon and Tue, well they are. But What I really wanted was a back end rally on Tue, why we are not rallying in disconcerting. If we dont turn this around then I will have to re-think my stance on the markets. People are just waiting for the British FED and the the JOBS report and the folks trying to make more money on downgrades (shorts), just playin their games, the analysts the SEC has to look into this. People go short in the same shop, then they have their guys downgrade stuff, they make money on the way down and then they buy on the cheap. then upgrade and make more money. This has been going on for years.

SETH TOBIAS

2007-12-04T11:01:00.000-05:00

I didn't know Seth but I thought him a good guy from what I saw on his many appearances on Cable. Who knows what his personal life was like, that's a subject for God. I don't know how he passed, but people are slamming him and that's a shame. As a physician there is really no reason for anyone to die at such a young age if drugs and alcohol are not involved. Unless, he had a congenital heart problem, severe atherosclerosis of his Coronary vessels or a dissecting Aorta to name a few things to cause sudden death.

To me, the guy made a lot of money and partied hard screwed up or worse he was whacked. In any case as a person who has lived through lifes ups and downs and somehow survived I sorry he is gone, even if i never knew him personally.

ITS TIME FOR USO

2007-12-04T10:37:00.000-05:00

Its time to start a position in oil, USO ETF is a great way to play oil. USO is right at its 50 day moving average and has all the funde's behind it, so technically and fundamentally its sound.

What I Want for XMAS

2007-12-04T09:59:00.000-05:00

IS to be right about the upcoming rally. I think we rally right now to the end of the year, and you know what. I am all in. I sold my short position this AM. I am long Global ETF's QLD, RIMM, VIP , BVN, PCR, ATW, and have calls in MER, CRNT, RVBD, YHOO, XLF, AMZN, VRTX, MSFT, INTC, FCX, MDR, MOS, POT, SNDK and finally shameful as it may be, I bought the ITB. Ok, I know the homebuilders stink in terms of FUNDE'S, but I think its time to build a position.

Thanx for listening Santa

I LIKE RIMM: MATE

2007-12-04T09:40:00.000-05:00

I told you yesterday the downgrade on RIMM made no sense (wall street) they do this crap to get the stock down, I hate the analysts. The are worth ten times less than the shoes they wear and why are they even employed. Why should you care what they say? Why?

KEEP THE INFO AND GIVE IT TO YOUR BIG ACCOUNTS, thats who should care.

BOUGHT RIMM YESTERDAY and BUYING MORE WITH BOTH HANDS (See intraday chart over the past few sessions)

http://custom.marketwatch.com/custom/tdameritrade-com/html-story.asp?guid={3D6B5FE9-767F-4337-8BE6-8D896EA4A13F}

SKF: Short Financials

2007-12-04T09:20:00.000-05:00

Check out the head and shoulders formation on this baby. This is the ETF for people who want to short the Financials. Its up big, check the chart but its forming a head and shoulders pattern and maybe I see this cause iI am long the XLF, wishful thinking?

Where is Ben Shalom?

2007-12-04T06:12:00.000-05:00

Do you know what I want for Chanuka Ben. A rate cut.

I don't get it, these guys know how bad it is out there, there have been multi billion dollar right downs by the major banks, so many mortgage houses have shut down, hedge funds gone under and Ben is fiddling while Rome (US) burns and his Fed friends like Bill Poole don't care. What are you guys waiting for, more bad news; it’s already late in the game or does Countrywide have to go out of business first. Albeit it’s not his fault. This mess was created by Alan GreenSputum, please excuse me but not only couldn’t understand him, I can’t stand him. Why is this guy still alive let alone writing and speaking? He kept raising rates till the economy blew up. And then he kept cutting and cutting and caused the housing bubble. When he was approached regarding lending standards he didn’t see the problem with the ARM's. The guy is a genius.

Like I posted on Friday, we ran into resistance so technically we have go down a couple of days to set up for a healthy rally. So far the downside i have predicted correctly (futures down this morning), we'll see about the upside. Last August, we did not go straight up to the old highs. So today we have to wash out the weak holders early in the session and then late in the trading day I hope to see the pro's put money to work. I hear there is a huge position in Money Market accounts right now, that’s got to come into the market but we need a catalyst and I don’t know where its going to come from. The news of government helping homeowners could not spur the markets, maybe the bank of England will ease on Thursday and there is the jobs report on Friday. Not much hope until 12/11/07.

Cut the rates now not on the 11th (just wishful thinking).

Joe Battipaglia: I can't believe this guy

2007-12-03T16:03:00.000-05:00

Joe Battipaglia is now a PERMA BEAR, I am sick of seeing him of Kudlow and Co. has this guy ever been right? NO! I don't know if you remember him he was PERMA BULL of the Tech Implosion and for the entire bear market. He was always on TV. Mr. Battipaglia made 44 media appearances in the second half of 2000 alone, making 128 recommendations. Only ONE was actually a sell. He recommended the sale of Philip Morris on September 7, 2000. THAT WAS A GREAT CALL, EH?

I think he's trying different things to see if can get it right. He goes on CBS Marketwatch.com, below is an excerpt .

He now of Stifel Nicolaus says it doesn't matter what the Federal Reserve does with interest rates, "it still means the economy is going to go through a very rough period of time" that hasn't yet been reflected in the stock market. "I do see downside risk in stock prices of anywhere from 5-15% from current levels," says Battipaglia, "and that may evidence itself through December, or it may come on after we get through December." Battipaglia says he wouldn't be surprised if the powers-that-be decide next year that we're in a recession. "The real definition for us is when you have a marked slowdown in output and employment and consumption," he says, "and isn't that what we're going through right now?" This is the same Joker who was bullish all through the tech bubble, you believe this guy.

Here are some of his most famous calls:

December 1999: Joseph Battipaglia, market analyst
"Some fear a burst Internet bubble, but our analysis shows that Internet companies account for only 7% of the overall Nasdaq market cap but carry expected long-term growth rates twice those of other rapidly growing segments within tech." (The Internet Index lost two-thirds in the next six months.)

7/10/00-growth in corporate earnings will once again become the primary catalyst for lifting equity values. In this regard, I expect the higher earnings growth profile of the Nasdaq composite to deliver the best performance and provide leadership for the broader market.

7/17/00-The strongest growth category should remain technology with year-over-year gains in excess of 30 percent.

Fundamental conditions are such that profits for the second half and next year have the potential to remain well above the historic trend line.

I recommend that growth investors remain fully invested at this time. I am making no change in my year-end index targets of 12,500 on the Dow Jones Industrial Average, 1,650 on the S&P 500, and 5,500 on the Nasdaq composite index.

7/31/01-investor focus should to give way to greater investor enthusiasm as the potential for an extended profit cycle well into 2001.

8/21/00-Again, the fundamental conditions for a continued bull market remain very much intact

8/28/00-The next catalyst for higher equity prices should be strong earnings growth in the second half and the potential for an extended profit cycle well into 2001.

10/11/00-it is unlikely that the NASDAQ composite will reach my year-end target of 5,500. Therefore, I am reinstating my originally forecast target of 4,300 for the NASDAQ composite index by year-end.

I am leaving my S&P 500 and Dow targets at 1,625 and 12,500, respectively....analysts and investors will become increasingly comfortable with forecasts for top line growth, profitability and improving backlogs.

I see no significant threat to the ongoing expansion of the U.S. or global economies.

the balance sheets of households, government and corporations continue to show improvement as assets and income rise relative to obligations. At the same time, years of increased investment spending by corporations will have long lasting effects in raising productive capacity, efficiency and long run profitability for most companies.

10/23/00-My initial estimate of next years profit growth is for a 14 percent improvement in S&P 500 operating earnings over this year's....should help support rising equity prices.

I believe that the worst of the correction is now behind us and remain committed to my year-end targets of 4,300 on the NASDAQ composite, 1,625 on the S&P 500 and 12,500 on the Dow Jones Industrial Average.

10/30/00-Having reviewed the third quarter data, I am maintaining my 3 to 3 1/4 percent growth assumption for the U.S. economy in 2001 based on continued growth in consumption, rising investment spending by business, improved export business and growth overseas.

My earnings forecast remains for 14 percent growth in S&P 500 operating profits next year. I remain over-weighted in the following sectors: pharmaceuticals, financials, communication services and equipment, technology, and consumer cyclicals. I am making no adjustments to any index targets at this time. My year-end index targets remain 12,500 on the Dow Jones Industrial Average, 1,625 on the S&P 500, and 4,300 on the NASDAQ composite.

11/6/00-my forecast remains for relatively strong growth of 14 percent in operating earnings - somewhat higher than the annualized growth rate of the 1990's.

My year-end index targets remain 4,300 on the NASDAQ composite, 12,500 on the Dow Jones Industrial Average, and 1,625 on the S&P 500.

11/13/00-PC manufacturers are the most recent victims of these worries as competitive forces and margin pressures take their toll. This, however, is not indicative of an end to the spending cycle for technology.

11/20/00-Once the election decision is in place, the positive fundamentals will once again take center stage for investors.

12/4/00- I believe that the Federal Reserve will lower rates in the coming months as they did in 1995. One, perhaps two, 1/4 point rate cuts likely by the end of the first half of 2001

The environment for equity investors is favorable in light of lowered expectations on earnings that can easily be exceeded and my forecast for credit easing by the Federal Reserve. Valuations also have become more attractive when measured relative to their forward price to earnings ratios.

Accordingly, I am initiating my 2001 year-end price targets on the various indices as follows:

Dow Jones Industrial Average - 12,700

S&P 500 - 1,650

NASDAQ composite - 4,300

I expect to hear from a "kinder, more gentile" Federal Reserve board when it meets to discuss the future of monetary policy

to read them all to to: http://www.capitalstool.com/joe-battipaglia.htm

Profit from Gaming

2007-12-03T15:02:00.001-05:00

While the gaming stocks have run up and are very expensive, Perini Corp is dirt cheap.(PCR) Perini Corporation is also involved in construction management, and design-build services to private clients and public agencies worldwide. It also offers general contracting; pre-construction planning; and project management services, including planning and scheduling of the manpower, equipment, materials, and subcontractors required for a project. The company operates in three segments: Building, Civil, and Management Services. The Building segment provides services to various markets, including hospitality and gaming (big project with MGM City Center), sports and entertainment, educational, transportation, healthcare, biotech (R&D Centers), pharmaceutical, and high-tech. The Civil segment specializes in public works construction and the repair, replacement, and reconstruction of infrastructure, primarily in the northeastern and mid-Atlantic United States. This segment also offers contracting services, including construction and rehabilitation of highways, bridges, mass transit systems, and wastewater treatment facilities. The Management Services segment provides construction, design-build, and maintenance services to the U.S. military (In Iraq and Afghanistan) and government agencies, as well as surety companies and multi-national corporations

Perini Corp. said on 11/8/07, third-quarter earnings more than doubled as revenue rose more than expenses. Net income jumped to $24 million, or 87 cents per share from $9.6 million, or 36 cents per share, in the year-ago period. Revenue rose 60 percent to $1.24 billion from $773.3 million. Analysts expected profit of 67 cents per share on revenue of $1.11 billion, according to Thomson Financial.
Perini said the higher revenue and profit came from "the conversion of our substantial building segment backlog into revenues and profit." Building is the largest of the company's three segments, which also include civil and management services units.
Uncompleted construction backlog declined to $7.8 billion from $8.5 billion at the end of last year. The company boosted its full-year profit and revenue targets. Perini now expects profit off $3.30 to $3.45 per share on revenue between $4.4 billion and $4.6 billion. The previous estimate had net income at $2.80 to $3 per share and revenue at $4.1 billion to $4.3 billion. Analysts expect earnings of $3.10 per share on revenue of $4.31 billion. Company has a earnings growth rate of 27%, sales are growing at 61% and has a PE of 14 therefore I believe its extremely undervalued.
The stock has sold off the day after earnings each of the last three reports, its trying to stabilize at the 200 day moving average, which looks like a cheap entry point.

Benefit From The Agriculture Boom

2007-12-03T14:04:00.000-05:00

The prices of all kinds of meat are up. So is the price for cereals – Kellogg's and General Mills have raised their prices. Orange juice, eggs, and milk – all up significantly. You see it perhaps most prominently in higher prices for corn and wheat. Wheat recently reached an 11-year high. Corn topped a 10-year mark last year.As a result, once forlorn places such as Iowa are hot. Eager investors lurk about like bag snatchers at a railway station. They are looking to scoop up farmland. It's no wonder since running a farm is a good business again. Take a look at the chart below of average gross profit per acre (U.S.).This prosperity spills over to related industries, like a freshly poured lager that overruns the sides of a beer mug. Agricultural equipment makers are sopping up some of that prosperity, too. Farmers need tractors. They need tires for those tractors. They need irrigation equipment. Basically, anybody who sells anything to farmers is doing all right. Including the makers of fertilizers.World population growth is still putting more demands on food production. Then there is increased prosperity in China and India and other parts of the world. The result is more people with more money in their pockets. And these people want to eat more meat. That stimulates grain production even more. More grain production means more fertilizer use.Global grain stocks were already low two years ago. Remarkably, they are lower now:Forecasts call for grain inventories to reach their lowest level in modern history by the end of this crop year. Grain production should reach a new all-time high this year at 1.66 trillion tons. (Drought conditions throughout much of the U.S. don't bode well for this forecast, by the way). Yet demand is growing faster, to about 1.68 trillion tons. In three of the last four years, demand has topped production and grain stocks have fallen.Another big factor in all of this is the rush for biofuels – in particular, ethanol. Ethanol production should devour about one fifth of America's corn crop. The rush to plant corn is a great boon for fertilizer makers. Corn alone accounts for about 40% of U.S. fertilizer use. Plus, many farmers have dropped the standard corn-soybean crop rotation in favor of continuous corn planting. If you don’t believe this just look at the charts of these stocks: MON, TRA, POT, DE, MOS, CNH, AG, CF and other in the fertilizer, farm machinery and related industries for 2007. If you don’t want to buy all these to benefit from the trend in the years to come, you can check out DBA and MOO.

Whats up with NAT GAS

2007-12-03T09:19:00.000-05:00

This is setting up nicely to go long around the 33.30 level. all comments are appreciated on this or any other material on this site.

RIMM downgrade: Not so fast

2007-12-03T09:03:00.000-05:00

RIMM gets hammered on Friday, and today we get another downgrade. I just love this wall street game. Lets get the little guy frightened out of the stock and we'll buy it cheaper, 109 is a great level to get back in, if I can get in here its a great place to start, and as the panicked small investors sell I will buy more hopefully lower. This company rocks in-terms of sales and margins. I think the move they made with China's Mobile carrier was huge. The stock is down 27 bucks and unfairly.

Look at the chart, its got to hold the 109 long term up trend line (support). I think it will, but again I will react to this as the day unfolds since I don't have a crystal ball.

Prudent Stock: 12/3/07

2007-12-03T08:44:00.001-05:00

(MDR) McDermott International, Inc., through its subsidiaries, operates as an energy services company worldwide. It operates in three segments: Offshore Oil and Gas Construction, Government Operations, and Power Generation Systems. The Offshore Oil and Gas Construction segment engages in the front-end design and detailed engineering, fabrication, and installation of offshore drilling and production facilities; and installation of marine pipelines and subsea (where the real growth is at) production systems. It also provides project management and procurement services. The Government Operations segment supplies nuclear components and provides various services, including uranium processing, environmental site restoration services, and management and operating services for various U.S. Government-owned facilities, primarily within the nuclear weapons complex of the U.S. Department of Energy (this is an undervalued component of their business). The Power Generation Systems segment designs, engineers, manufactures, constructs, and services utility and industrial power generation systems, including boilers used to generate steam in electric power plants, pulp and paper making, chemical and process applications, and other industrial uses.

MDR has shown a consistent and predictable history of financial performance but their last quarter showed some slowing in the growth rate, they missed the quarter and the stock got hammered. This was an over reaction in my humble opinion because the stock had more than doubled YTD. This was coupled with the decline in the OSX and slowing world wide economic growth caused a precipitous fall in stock price. Its current EPS is $2.89 per share, and has a forecasted earnings growth rate of 27.00%, and a current PE of 18.

Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates the stock is undervalued on a growth to PE ratio. If you look at the chart the stock has bounced off its long-term up-trendline nicely, so it looks good technically as well and is a good time for me to start accumulating.

Stock Market Week In Review: 11/30/07

2007-12-01T13:14:00.000-05:00

Fed Chairman hinted at further interest rate cuts.

Gross Domestic Product was revised up to 4.9% in the third quarter of 2007. Downward revision to new home sales in July, August and September, new home sales inched up 1.7% in October.

Home builders cut prices by 13% on a year-over-year basis.

Existing homes sales in October fell 1.7% to an annualized 4.97 million units, 8th straight monthly decline.

U.S. Construction Spending surprisingly fell a hefty 0.8% in October, another fallout of the crumbling housing market.

Orders for big-ticket items fell 0.4% in October, following a 1.4% drop in September and a 5.3% plummet in August.

Personal Income increased at a seasonally adjusted rate of 0.2% in October as compared to the previous month.

Personal Consumption rose by 0.2% as compared to the previous month, the weakest rise since June.

Chicago's Purchasing Manufacturers Index rose from 49.7 in October to 52.9 in November.

Jobless claims jumped by 23,000 in the week ending November 24th to 352,000, the highest reading since early February.

Stock Market Recap for 11/30/07

2007-11-30T16:50:00.000-05:00

The futures got a nice boost Friday morning from a series of positive developments that included a drop in oil prices below $90 per barrel, a report that a bailout plan is in the works for subprime borrowers, and a tacit signal from Federal Reserve Chairman Ben Bernanke that interest rates will likely be cut again at the December 11 FOMC meeting. The Government it seems is likely to step in and support the dollar (just my thinking), so the Fed can cut fifty to bail out the Banks.
(See charts) Technically the market averages were up substantially over the previous three days with a gap higher start on the fourth day to resistance near 1490 S&P 500 (Oct low/early Nov breakdown point, Mid-Nov reaction high, 50% retrenchment of Oct-Nov decline), 2698/2701 Nasdaq Comp (same resistance as S&P 500) and 13346/13460 (early Nov low/breakdown point, 50% retrace) providing an opportunity to book at least some profit, we could get a couple of down days Monday and Tuesday before the buyers come in unless there is some more good news. Top performers on the day outside of Finance/Housing included Transports, Paper, Tobacco, Retail, Medical Supplies and Media. Weakness today came from Computer-Hardware, Mining, and Gold/Silver.
In a nutshell, we are up big on the week with housing and financials as the front-runners, which is fitting since this all started with them so they should bottom first. The market doesn’t bottom all at once, so if you look at the different sectors the Nasdaq was hanging in while the S&P and Dow were getting hammered, until it dropped a hundred points in a two day period. So I expect that to be a laggard.

Oil Services ETF

2007-11-30T14:39:00.001-05:00

The oil service stocks have been hammered lately, and OIH (OSX ETF) recently hit 203/share is down almost in the straight line from there almost thirty bucks. The oil services basket is trying to stabilize around the 171 level, Oil prices are down from a 100, 12 bucks in a week. The oil service stocks usually go up before Crude. We are in seasonally the best time to buy oil service stocks with the winter freeze upon us, the only conflicting thing i see here is that the $BPENER, bullish percent energy index doesn't appear as oversold as I would wish and that fact is keeping me from going all in to this trade. Time to start nibbling.

Financial Sector ETF

2007-11-30T11:53:00.001-05:00

On of my favorite indicators for the markets is the $BPFINA, when its >30 level its time to buy the XLF, this time I was too early as we went all the way to 16.13 and its not too late to catch this move, they are extremely oversold still and we wont go straight up so I have been nibbling since the day the character of the markets changed the best friends of the at this time are the Financials. Check out the chart it will tell you when to exit, usually at or above 80. You can see on the weekly chart takes time to unwind so I try to sell in increments as it can stay overbought for weeks.

Prudent Stock:11/30/07

2007-11-30T09:58:00.001-05:00

(JCI) Johnson Controls, Inc. is an interior experience, building efficiency, and power solutions company. It operates in three segments: Building Efficiency, Automotive Experience, and Power Solutions. Building Efficiency segment engages in the design, production, and installation of control systems that monitor, automate, and integrate building operating equipment and conditions. The stock is down significantly from a 52-week high but has held up well at the 200 day moving average, I may be a little late but there is still room in this move. It reported a good quarter and has been a steady and consist stock for many years. The company recently forecasted earnings growth 17%, sales growth of 11%, and has a PE of 13. The stocks fair value is around 60/share.

A Change in Character for the Market

2007-11-29T09:20:00.000-05:00

Tuesday we sold off mid-day and finished strong that was a tell. I noted that the correction is over, but we won't go straight up but i do think we rally until year end. I will be buying the DXD until 46 level, (Ultrashort DOW, goes up when DOW goes down) as it gets weaker to have insurance in the portfolio for the downside. We had bleak economic news yesterday, Oil prices saw a biggest one-day drop in dollar terms, but comments from the Fed vice Chairman spurred the markets to a huge and impressive gain. The technicals of the market are improving, the supports have held very strongly (see chart) However the fundamentals are weak, subprime and housing weakness haven’t gotten better but remember the market in forward looking and is expecting rate cuts, Fed is back on the side of the equity markets, and the fund managers have to buy the stocks that have done the best so they can show their boards that they didn’t miss the boat on the good stories of the year. So buy the weakness will work when adding to positions at this time with a short leash, this is no time to roll the dice.

See disclosure

Prudent Stock: 11/29/07

2007-11-29T08:52:00.000-05:00

(MTW) The Manitowoc Company, Inc. engages in the manufacture and marketing of cranes and related products, foodservice equipment, and marine products in the United States and internationally. It operates through three segments: Cranes and Related Products (Cranes), Foodservice Equipment (Foodservice), and Marine. The Cranes segment designs, manufactures, and distributes crawler and truck mounted lattice-boom cranes, top slewing and self erecting tower cranes, mobile telescopic cranes, and hydraulically powered telescopic and articulated boom trucks under Manitowoc, Potain, Grove, and National brand names. This segment provides crane product parts and services, and crane rebuilding and remanufacturing services under the Crane CARE brand name. Its products are used in various applications, including energy, petrochemical, and industrial projects; infrastructure development; commercial and high-rise residential construction; and mining and dredging. The Foodservice segment designs, manufactures, and markets commercial ice-cube and flaker machines and storage bins; refrigerators and freezers; refrigerated under counter and food preparation tables; ice/beverage dispensers; post-mix beverage dispensing valves; cast aluminum cold plates; carbonator tanks; long-draw beer dispensing systems; compressor racks and modular refrigeration systems; pumps; valves; and backroom beverage equipment. It offers its products under Manitowoc, SerVend, Multiplex, Kolpak, Harford-Duracool, McCall, McCann’s, Koolaire, Flomatic, Kyees, and RDI brand names. The Marine segment operates three shipyards in Marinette and Sturgeon Bay, Wisconsin; and Cleveland, Ohio. It designs and constructs military and commercial vessels, double-hulled tank vessels, articulated tug and barge units, dredges, dredging support equipment, and bulk cargo self unloading solutions, as well as engages in large ship construction projects and repair work.

MTW has shown a consistent and predictable history of financial performance. Its current EPS is $3.06 per share, and has a forecasted earnings growth rate of 25.00%, and a current PE of 13.73.

Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates it should be fairly valued at a range of $73-78 per share. If you look at the chart the stock it has found real support at the 200 day moving average. In my opinion the stock was unfairly sold of after earnings due to domestic weakness and fears that the rest of the world would slow due to a US recession. I think all that is reflected by the sell off in the stock in recent days. I opened a position yesterday at the open and will add on any weakness.

See disclosure

Prudent Stock: 11/28/07

2007-11-27T19:01:00.000-05:00

(MTL) Mechel , an open joint stock company, through its subsidiaries, operates as a mining and steel company. The company engages in the production and sale of coking and steam coal concentrate, steam coal, iron ore concentrate, and ferronickel that are used in the production of steel. It also produces semi-finished steel products; carbon and specialty long products; carbon and stainless flat products; value-added downstream metal products, including hardware, forgings, and stampings; and coke and coking products. As of January 1, 2007, the company had proven and probable reserves of approximately 281.8 million tones of coal; 61.4 million tones of iron; 13.0 million tones of nickel ore; and 23.9 million tones of limestone. It operates in Russia, other Common Wealth of Independent States, Europe, Asia, and the Middle East. The company is headquartered in Moscow, Russia.

MTL not to be confused with MT (Mittal Steel also a great steel stock) has shown a consistent and predictable history of financial performance. Its current EPS is $7.54, and has a forecasted earnings growth rate of 30.00%, and a current PE of 9.93.

Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates it should be fairly valued at a range of $130-135 per share. If you look at the chart the stock as hung in real well during the sell-off. The chart has some real strength supported by excellent fundamentals and is undervalued.

see disclosure

Stock Market Recap: 11/27/07

2007-11-27T18:26:00.000-05:00

Market futures opened up strong on the back of Citigroup news, followed by a decline in the futures by two thirds. Then we had a progressively bullish start. Stock prices retreated as the confidence number hit the wires, but they shook off the headline disappointment knowing that (a) the decline wasn't really that surprising given the negative headlines of late economic data,(b) Thanksgiving sales reports exposed the weak link between confidence and actual spending activity and oil dropped 3.5%.
Later in the day the market was weakened by bearish comments by the Philadelphia Fed (Plosser). Market gave up nearly half of its gains on the back of that commentary. However, all said and done, there is finally a technical light at the end of the tunnel. The bullish sign I see here is that the rally gained strength at the close and did not fade. When the DOW crashed through support yesterday and quickly regained the 12900 (INDU) mark. I am now calling an end to the correction phase, we won't go straight up though. If you start plotting your trend line from yesterdays lows I believe we will be much higher in the next two to three weeks. But thats not what I do, I am not a prognosticator so I have to position my self for the probability scenario. I still am 20% short and 50%long at this time. On days there is selling I will lighten up on short and add to my long positions.

Prudent Stock: 11/27/07

2007-11-27T08:05:00.000-05:00

(NOV) National Oilwell Varco, Inc. engages in the design, construction, manufacture, and sale of systems, components, and products to the oil and gas industry worldwide. It operates in three segments: Rig Technology, Petroleum Services & Supplies, and Distribution Services. The Rig Technology segment produces and sells systems for the drilling, completion, and servicing of oil and gas wells. It provides equipment that automates well construction and management operations, such as offshore and onshore drilling rigs; derricks; pipe lifting, racking, rotating, and assembly systems; coiled tubing equipment and pressure pumping units; well workover rigs; wireline winches; and cranes. The Petroleum Services & Supplies segment offers various consumable goods and services used to drill, complete, remediate, and workover oil and gas wells and service pipelines, flowlines, and other oilfield tubular goods. Its products include transfer pumps, solids control systems, drilling motors and other downhole tools, rig instrumentation systems, and mud pump consumables. This segment also provides oilfield tubular services, including the provision of inspection and internal coating services, and equipment for drillpipe, linepipe, tubing, casing, and pipelines; and engages in the design, manufacture, and sale of coiled tubing pipes and composite pipes for applications in corrosive environments. The Distribution Services segment offers maintenance, support, repair, and operating supplies; and spare parts to drill site and production locations. National Oilwell Varco serves drilling contractors, shipyards and other rig fabricators, well servicing companies, national oil companies, independent oil and gas companies, supply stores, and pipe-running service providers. The company is based in Houston, Texas.

NOV has shown a consistent and predictable history of financial performance. Its current EPS is $4.58, and has a forecasted earnings growth rate of 25%, and a current PE of 15.
Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates it should be fairly valued at a range of $123-128 per share. Recently the stock was hammered due to growth rate concerns, slowing economy or possible recession, it’s been hanging in well the last 4-5 trading sessions. Stock made a bottom around $61 and seeing as how its fair value is over a 120 it looks like a good buy.

Investment in Citigroup spurs futures

2007-11-27T07:50:00.000-05:00

The futures are sharply higher this morning (although, off there highs). Due to several factors: The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset big losses from mortgages and other investments. British bank Barclays said Tuesday that it expects earnings for the year to broadly match market expectations as growth in retail and commercial banking has helped it cope with the turbulent credit markets. On Monday, Pulte Homes (PHM) reaffirmed its fourth-quarter quarter pre-impairment earnings and cash position outlook, despite a weak housing market. I guess people think there is real value in the US financials. In any case, I have not trusted any of the recent rallies and have not been buying into them, but I am opening small positions in sell offs. I still believe we go to 12500 (INDU) before it’s all said and done.

Stock of the Day 11/26/07

2007-11-25T10:43:00.001-05:00

(BVN) Compania de Minas Buenaventura S.A.A. engages in the exploration, mining, and processing of gold, silver, and various metals in Peru and internationally. It primarily produces refined gold, and various metal concentrates, including silver-lead concentrate, silver-gold concentrate, zinc concentrate, and lead-gold-copper concentrate. The company operates six mines and holds controlling interests in two mining companies; BVN also owns an electric power transmission company; an engineering services consulting company; and interests in various mining companies. It sells its metal concentrates to smelters, traders, and banks principally in Peru, Europe, North America, Asia, Oceania, and South America.

The company boasts a strong management and has shown consistent and predictable financial performance. BVN has a forecasted EPS of $4.01 per share and has a forecasted Earnings Growth Rate of 23.00%. BVN has a P/E of 13.66. Sales Growth of 35.00% per year. Consistent stock price performance over the past few months. Its recently retreated from a 52wk high of 62.50, and is stiil around it's 50 day moving average, its held up well in the downturn. BVN stock is undervalued and could see fair value between $90-95.

Investment Environment:

2007-11-25T10:24:00.000-05:00

Earnings and inflation are rising, while interest rates are falling or on hold.
New housing starts rose by an unexpected 3% in October to an annualized 1.229 million.
Single-family starts dropped for the 7th consecutive month in October by 7.3% for an 884,000 rate, a 16-year low.
Building permits, a gauge of future demand, also fell in October by 6.6%, a 14-year low.
The National Association of Home Builder's Optimism Index remained at 19 for the second straight month in November and the lowest reading on the Index since its inception in 1985.
Large declines in housing permits, initial claims for unemployment insurance and the Index of Consumer Expectations pushed the Leading Index 0.5% lower in October, a 2-year low.
Jobless claims fell by 11,000 to 330,000 in the week ended November 17th.
Crude oil topped $99 per barrel last week
U.S. crude supplies fell for the 2nd week.

All the indicators I follow (see philosophy) at or near where the stock market bottomed in August, I just haven’t seen capitulation in the VIX, an intra-day spike with a powerful reversal would be perfect to call a bottom. Although we may not get a perfect situation its not unreasonable to have a list of stocks to buy and start entering them piecemeal in the next couple of days. There still may be some room to move to the downside but damage should be limited.

Investment Method and Philosophy

2007-11-25T09:19:00.000-05:00

My investment philosophy is to buy stocks long when the market conditions are right. So what does that mean? The market goes up and down every day but if you connect the dots you see the market prices make higher highs and higher lows which points to an upward trend, or the market can make lower highs and lower lows or a downward trend. Or the market can go side ways or be in a consolidation phase. Best time to buy stocks is when the up ward trend is intact. I use several indicators that have not failed me yet to determine bottoms and tops but the most reliable one is $BPCOMPQ, NASDAQ bullish percent index (See previous posts). I also use the Volatility Index (VIX) and the number of new 52-week highs and new 52-week lows and trend lines, which I will discuss sometimes on a daily basis.

With regard to picking stocks my philosophy to find stocks that have been knocked down without any real bad news or fundamental change to their outlook or their business. These stocks have a habit of reporting consistent earnings growth in the past 8-12 quarters, so they have strong management, they are undervalued with respect to their projected earnings growth and there is some theme or story about the stock, which is intact.

Finally, when to sell or take some profits. Stocks don’t just go up and up forever; they usually trade between upper and lower trend lines, some stock however do go up almost in a vertical fashion but that may last a few days, they usually revert to their trend or crash.

How I buy and sell, First I make certain the Market is buyable, then I establish that a stock meets my criteria, I buy 1/3 position to open, if the stock goes down 10 percent I close the position and look for another. If the stock moves sideways or up I will buy another 1/3 and buy the final 1/3 up to 5% on the upside. So when to take profits. I take off 1/3 when the stock hits its upper trend line or there is a blow off day, where the stock make intra-day 52-wk high during the day and either closes down or flat or slightly up and the volume. This is a sign of a tired stock. There are times that after a few days of profit taking the stock will continue to run up, that’s why its good to not take all your position of the table. If the stock breaks down sell another 1/3, sell the final 1/3 if the stock hits its 13-week moving average.

It is important to know there are many different methods to picking, buying and selling stocks. Nothing is set in stone and a lot of it is a matter of practice and finding a way that you are comfortable with. One thing is for sure don't fall in love with your winners, cause that’s when they become your biggest losers. Stocks are just pieces of paper don't fall in love with them.

Weekly Market Chart Wrap 11/23/07

2007-11-23T13:33:00.000-05:00

(Chart of the NAZ from 8/06 - 11/23/07 ) shows it has given up about 66% of the move from August low to it's late October high . The bounce in the Indices today comes after a day where there was not one sector in the green, a rarity. NAZ bouncing right at the 200day moving average, only significant only if there is a follow through the next trading day, otherwise a one day wonder. A break above 2700 would mark the end of the correction. The path to least resistance is still definitely to the downside so this is no time to make big bets and keep everything on a tight leash. I am protecting my capital.

DJIA looks a lot worse than the NAZ, its given up about 80% of its move from August. It's sitting below it's 200 day moving average which is extremely bearish but its sitting right around it's up long-term trend line, a break below iti would be disastrous. Next support level would be around 12500.

S&P 500 is also below its 200 day moving average and is barely hanging on to its long term trend line. It's August low is the next support level which is 1370.

Next week will be crucial for the markets as we are right at a breaking point. I would have loved to have seen a crash straight down to August support levels to get the weak holders out of the market. In my opinion this rally simply prolongs the pain that is surely to follow, unless we get some emergency ease by the Fed on Monday.

Have a good weekend.

Stock of the Day 11/23/07

2007-11-23T12:30:00.000-05:00

(VIP) Vimpel-Communications provides wireless telecommunications services in Russia, Kazakhstan, Ukraine, Uzbekistan, and Tajikistan. The company offers its services under the Beeline, K-mobile, EXCESS, and Armentel brand names. Its wireless services include voice telephony services; value added services, including voice mail, short messaging service, call forwarding, wireless Internet access, entertainment and information services, and music and data transmission services; and access to both national and international roaming service. The company offers these services to its subscribers under two types of payment plans, which include contract plans and prepaid plans. Vimpel also sells wireless handsets and accessories to its subscribers. As of December 31, 2006, it had approximately 55.1 million subscribers. Vimpel-Communications has strategic partnership with Telenor East Invest AS and Alfa Group. The company was founded in 1992 and is based in Moscow, Russia.

Vimple has a forecasted EPS of $1.71 per share, which would give it an estimated Earnings Growth Rate of 29.00% vs a PE ratio of 18 so the stock is very cheap. Stock has held up very well during the decline and was actually up on some of the really bad days. Stock has value til a price of $49.95 per share. Best part of this story is the rest of the world is growing a lot faster than the US and from a very low base and thats where VIP sells. I do not own this stock but its a part of one of my mutual funds. and i looking to go long but i am looking to open a position.

Please note that the subject matter provided on all of the posts on this site is for information purposes only and should not be construed as a recommendation to buy or sell stocks or funds by the author. Investors who do so should do their own due diligence and or consult their financial advisor and are responsible for their own financial decisions.

Most Undervalued Stocks: Wk 11/19/07

2007-11-23T12:08:00.000-05:00

Symbol	Price	$ Change	%PRC	PE	Growth	AvgVol	Mkt Cap($M)	Sector
PTR	181.00	-9.60	-5.04	14	28	1685100	324028.00	Petroleum
GES	40.48	-0.03	-0.07	11	28	1725200	3809.57	Apparel
SHI	56.52	-4.16	-6.86	6	30	100900	4069.44	Chemical
TNH	100.91	-4.29	-4.08	10	26	312100	1886.01	Chemical
BHP	69.85	-2.86	-3.93	11	26	5381700	197683.20	Mining
CCJ	39.86	-1.89	-4.53	15	29	3232900	13836.20	Mining
FCX	90.06	-1.79	-1.95	8	26	11449800	34395.72	Mining
PCR	49.67	-2.96	-5.62	13	28	520000	1340.10	Building
TKG	95.25	-2.16	-2.22	5	29	5700	12397.74	Utility
MSCC	22.59	+0.25	+1.12	18	30	1213700	1731.07	Electronic
PCU	100.20	-5.79	-5.46	10	19	2176400	29505.89	Mining
VIP	31.05	-0.45	-1.43	18	29	3146400	31594.62	Telecomm
EXM	39.30	-1.94	-4.70	6	29	1517000	784.04	Transportation
GENZ	71.74	-0.96	-1.32	19	30	2848900	19081.41	Drug
MDR	46.93	-2.15	-4.38	16	27	2338600	10567.23	Petroleum
MTW	38.33	-0.66	-1.69	12	25	2094600	4814.25	Diversified Companies

Please note that the subject matter provided on all of the posts on this site is for information purposes only and should not be construed as a recommendation to buy or sell stocks or funds by the author. Investors who do so should do their own due diligence and or consult their financial advisor and are responsible for their own financial decisions.

Stocks with the highest relative strength: wk 11/19/07

2007-11-23T10:43:00.000-05:00

Despite this very weak market in November there are some stock that have value and have outperformed this horrible market. Stocks like this usually have some fundemental reason to defy the general market selling.

Symbol	Price	$ Change	%PRC	PE	Growth	AvgVol	Mkt Cap($M)	Sector
ATRO	48.22	-0.33	-0.68	22	28	48800	389.62	Aerospace & Defense
STP	63.74	+2.29	+3.73	39	40	4373400	9531.04	Energy
AXYS	36.62	-0.38	-1.03	23	16	100600	393.30	Aerospace & Defense
FFH	296.00	0.00	0.00	9	28	75900	5230.32	Insurance
RTSX	31.10	+0.03	+0.10	18	18	318100	736.76	Healthcare
PDGI	39.20	-0.23	-0.58	23	30	286800	740.88	Healthcare
DIT	40.90	-0.84	-2.01	5	21	5400	21.68	Retail
BOBJ	61.34	+0.32	+0.52	26	28	1311100	5792.95	Software
MTL	74.08	-3.02	-3.92	10	31	869500	10279.34	Steel
CLR	22.06	+0.02	+0.09	15	17	468300	3707.18	Petroleum

Current Market Condition

2007-11-21T15:27:00.000-05:00

11/21/07

There is only one word to describe the last few trading days, Brutal. Market tried to rebound and the Nas actually made it to the green for a second or two, only to visciously retreat. As i said in the 1pm post I don't believe in this intra-day rebound, referring to the 11am post. We are way oversold, I think the market is heading to 12500 on the Dow, 1370 on the S&P 500, I am less certain about the NAS since it hasnt collapsed as badly as the other US averages. I think people have been hiding in the NAS, the Brazilian, Indian and Central and Eastern Euro ETF's as well as the Ag, metals, and oil ETF's and that may be the next shoe to drop. I'll put up the charts soon.

So here are the facts the Fed has managed to have a "soft landing" only twice in the last ten economic downturns. The last one was in 1995, when Greenspan somehow pulled that rabbitt out of a hat. It was the only one he had in 20 years in office, so the chances of Dr. Bernanke taking us to a soft landing are slim and none and slim maybe on vacation. The Fed always raises rates more than they have to and cuts too late and too often and the cycle continues.

The Consumer Price Index, CPI, rose 3.5% year-over-year, up from 2.8% in September, due to the increase in energy costs.

The Producer Price Index, PPI rose less than expected, up only 0.1% last month, but the year-over-year gain of 6.1% is more telling, as expectations are that it will continue to rise with energy prices.

Consumer Confidence is at Katrina like levels.

Oil is in nose bleed territory.

Housing bubble and the credit crisis isn't going away.

The fed really blew it at the last meeting when Fed said it felt that the risks of inflation and the downside risks of a slower economy were roughly in balance. Yesterday they said inflation is in check and the risk to a weaker economy is greater, but they will wait for further. What data are they waiting for, to see people flying out windows.

With all that good cheer

HAPPY THANKSGIVING

Market Intraday Rebound

2007-11-21T13:06:00.000-05:00

Funny thing happened after I posted I am beginning to nibble on ETF's, the market seems to have had an intraday rally. I am extremely skeptical at this point. I don't think anything has changed. Until the Fed steps in we are going to crash right past 12500 and then the fire works will start. But as an investor you cant hope for stuff to happen you have to plan to protect your capital. Read the market like you read your patients and objective tests and this patients EKG looks bad. Its almost time to put him in the unit.

Investing Lessons: Painfully Gained

2007-11-21T12:16:00.000-05:00

11/21/07

I don’t know about you but I didn’t get any business classes on the way through Medical school, nor was I ever taught how to bill for my work or how to run my practice. I learned through trial and errors (countless). Below are some things I learned from smart people.

Focus on assets; focus on ways to save for investment money and not cars or luxury items.

Once that money is invested don’t dip into the capital, if you must use the money it earns, but don’t touch the principal.

Diversify your investments and reduce risk. Stocks, Bonds, Real estate.

Spend more time finding a tax professional, even if they are more expensive, a little extra for good tax advice saves money in the long run, all the latest research states that the top most income earners pay the least in percentage terms, there is a reason for that.

Invest in education funds for your kids.

Don’t panic and make bad decisions about very rational things, if you did your homework and do your follow-ups as you do with your patients you will make better decisions.

Spotting a market bottom

2007-11-21T11:22:00.000-05:00

11/21/07

One of the other ways I like to look for tops and bottoms so I can trim and add positions as needed is a very useful indicator known as the Nasdaq Composite Bullish Percent Index. If you go to http://www.stockcharts.com/, a very useful site, from which I get no compensation. Type in $BPCOMPQ and you will see a chart of an index that is trying to find a bottom. Last August the market bottomed at 32.5, we are almost there. You can see a longer term view of the chart and you'll see below 35 or so market tries to start finding its way up. For the tops you can start to take profits when the RSI gets above 70, so i usually take off 25% off the table, because with being oversold and overbought it can last a while, and you can let your profits run. Then what I do is look at the new 52 week highs list and as that starts to get lower in number, at that point the rally phase may be losing steam, then I close out another 25% of my positions. I have been using this method with a great deal of success.

More Pain: For Markets

2007-11-21T11:03:00.000-05:00

11/21/2007

Good morning everyone as i mentioned yesterday this market bounce was just reflexive and so far there is nothing on my screen but red. I suspect we are getting close so i am going to start taking some small long positions in ETF's, which I will build as we get closer to 12500. No pain no gain.

Blog Purpose

2007-11-21T10:45:00.000-05:00

Hello everyone, I am an avid market watcher and a student of fundamental and technical analysis. Investing in and talking about stocks and the stock market is a passion of mine. Although I have no formal education in it I have spent thousands of hours trying to learn how to succeed in investing.

I wanted to start this Blog to provide a free site to help people who are confused how to invest in the stock market. I was confused for years, I always had questions about what I should buy, when should I sell, where should I invest, bonds, real estate, mutual funds, stocks, small caps, big caps, mid caps, it was all so confusing. When I first started investing I'd just give my money to the professionals in the big brokerage houses, and I consistently under performed the market. I couldn't figure out why it was so difficult to make my money grow. I was successful in my own practice but my hard earned money wasn't working. I had just figured that the professionals I gave my money to knew more than I did. I was sure they used proven formulas and methods that would inevitably help me.

Well lets just say I wasn’t happy, and neither were my colleagues, almost everyone I knew wasn’t happy with their advisors. After years of frustration and watching the march up a few thousand points without me, I started subscribing to the newsletters that would flood my office. I don’t know where they found me but I used to get so many of them. I would follow their advice but I never made money, no one tells you how and when to buy and most importantly when to sell. You can’t just buy and hold. I have seen so many stocks skyrocket never knowing when to sell being almost paralyzed, and then watching all the gains disappear, so painful. Buy and hold was the theory before the Internet bubble, stock always comeback they used to say. Following expert advice, I lost a few hundred thousand dollars following.

Finally, I picked up the some investment periodicals (IBD, WSJ and Barron's), but i couldn't figure out how to use then, I read books by William O'Neil, Peter Lynch, Peter Williamson, I took courses on technical analysis, and became a full time market student, then bear market after the bubble hit that was a very confusing time but during the last six years I have beaten the major averages by double digits, one year believe it or not by triple digits (2003). I am not trying to boast, 2003 was an unusual year, lots of mutual funds did well because we were coming out of recession, 9/11 attacks, very low interest rates, home building boom for materials, so lots of folks did exceptionally well.

I believe anyone who puts in the time and effort can make good money in the market. In any case the purpose of this Blog is to eventually get other people who have an interest in the market to share ideas maybe people can be helped from making the same mistakes I made. I will get into my investment philosophy in next posts. I will say that if you have a busy business and don’t have a lot of time to follow the gyrations of the market don’t buy individual stocks go to morningstar.com and buy no-load highly rated mutual funds. I will have a section on mutual funds in the near future. Please remember I am not an investment professional nor do I claim to be. I have spent years of suffering (losses/paying high fees) to finally come to understand how The Street works and remember I am a work in progress.